The Texas House of Representatives will begin debate on H.B.1 and H.J.R. 1 on Tuesday, May 4. These legislative measures propose a new state system for funding public schools (including relevant taxing issues) as well as the needed changes to the State's constitution to enact the proposed school finance system.

Major components of the bill include the following:

EDUCATION REFORM ISSUES

• The bill changes the state's allocation system to public schools by establishing a foundation tier to meet the state's educational goals. This foundation tier is to be funded through accreditation, special student, and new instructional facility allotments to districts. Each school district's responsibility to fund tier one is determined by a formula based on local property valuation with the state providing transitional aid to maintain state and local revenue in cases of rapid declines in taxable value.
• The bill also establishes an enrichment tier to provide school districts the option of supplementing basic programs through an enrichment tax rate not to exceed $0.10 per $100 of property valuation.
• The bill increases by $500, to $1000, the health insurance pass-through to full-time classroom teachers, librarians, nurses, and counselors. [Note: While this "reinstatement" of funding is already slated to occur, the measure in the bill provides specified funding.]
• The bill creates several incentive programs geared at increasing student achievement. The commissioner of education shall provide grants to school districts which develop local incentive programs, the primary criteria of which shall be measures of incremental growth in students' achievements. In general, these grants will be used to provide awards of at least $2,500 to up to 15 percent of a school district's employees (including all classes of educators).
• The bill makes changes to state facilities funding and prohibits the use of the funding to construct, acquire, or improve stadiums or other facilities predominantly used for extracurricular activities.
• The bill eliminates the exit-level TAKS tests and replaces them with end-of-course assessments.
• The bill requires the Texas Education Agency to develop computer-based assessments and creates other requirements regarding student assessment.
• The bill requires statewide uniformity in online management, including the use of the Public Education Information Management System (PEIMS), a new student tracking system, and accounting systems.

REVENUE MEASURES

• The bill establishes a uniform local property tax rate of $1.05 per $100 of valuation and limits to 5 percent the annual increase of the appraised value of qualifying residential real property and specifies the circumstances under which this limitation expires on a particular piece of property. The bill also allows a local option tax rate of $0.10 per $100 of valuation for local enrichment.
• The bill increases the state sales tax rate to 6.75 percent from 6.25 percent.
• The bill increases the motor vehicle sales and use tax rate to 7.75 percent from 6.25 percent, and it increases the boat and motor sales and use tax rate to 7.75 percent from 6.25 percent.
• H.B. 1 imposes an admissions tax of $1 per ticket to a professional athletic or amusement event, a permanently sited theme park, and a live performance. Events sponsored, produced, or affiliated with educational institutions and nonprofit entities are exempted. Net revenue from the admissions tax is dedicated to public education.
• The bill increases the tax rate on cigarettes.
• The bill extends collection of the Telecommunications Infrastructure Fund assessment until 2007. It permits entities that have not previously recovered the assessment from its customers to do so.
• H.B. 1 repeals the franchise tax and establishes a payroll tax on employers. The tax imposed is the lesser of 1.25 percent of the wages paid to that employee during the calendar quarter or $125 ($500 per year) for each employee. Governmental entities and charitable organizations are exempt from this tax. Employers are prohibited from deducting the tax from employees' wages.
• C.S.H.B. 1 permits the Texas Lottery Commission (TLC) to implement and operate a video lottery system and to control the operation of video lottery terminals (VLTs) at racetracks.

Almost all of the text above comes from the House Bill Analysis, available at http://www.capitol.state.tx.us/cgi-bin/tlo/textframe.cmd?LEG=78&SESS=4&CHAMBER=H&BILLTYPE=B&BILLSUFFIX=00001&VERSION=2&TYPE=A.

Once the House passes a version of the bill, the Senate will then begin studying the bill and will have the opportunity to make its own changes and add its own proposals. The full Senate will then vote on the measure, and the final bill will then need to be reconciled with the House bill in a conference committee.

You can find contact information for your local state representative and senator from the State website at http://www.capitol.state.tx.us/psf/.